Damodaran: Anthropic IPO will be priced on ARR; $1.5-2T needs 30%+ margins
rohanpaul_ai · x · 2026-10-24
NYU professor Aswath Damodaran ('Dean of Valuation') published a long analysis of the upcoming Anthropic IPO, arguing it will be priced on run-rate revenue rather than cash flows — ARR being the AI era's equivalent of dot-com eyeballs.
- Justifying $1.5-2T requires very fast early revenue growth, operating margins above 30%, compute costs growing slower than revenue, and risk converging to average.
- H1 2026 losses of $8.7B at Anthropic and $21.6B at OpenAI (ex non-cash charges) rule out earnings multiples.
- ARR has no standard: OpenAI's $50B counts partner sales net, Anthropic's $65B gross; grossing up OpenAI yields $70B. Both annualize monthly — a choice either can change.
- He argues VC rounds are pricing the IPO rather than valuing the business, and advises waiting for the prospectus (expected next week) before taking sides.
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